US Unemployment Rate Lowest in Almost 3 Years

by InvestorPlace Staff | January 10, 2012 2:46 pm

According to Labor Department officials, the United States December unemployment rate dropped to 8.5 percent from an 8.7 percent in November. The job market was strengthened by an addition of 200,000 jobs in the private sector. The employment growth rate over the past 13 months is the strongest recovery since the rebound after the 1990 to 1992 recession.

The report also stated that even though unemployment fell, participation in the workforce stayed consistent. Private sector employment showed strong growth in small and medium sized businesses. Unfortunately, the government sector took a small hit and removed 12,000 jobs. Specifically businesses such as courier services, bars and restaurants have increased in hiring employees.

Also manufacturing and skill service jobs have been rising. Skill service jobs range from the food industry to health care and incorporate a large portion of the most recently added jobs.

Weekly applications for unemployment benefits have fallen to as well and holiday retail reports show strong revenues. The increase in hiring and consumer spending reflect a modest improvement in the economy.

“More people are working and earning more income, and that’s reflected in a better consumer psyche,” said Stuart Hoffman, chief economist at PNC Financial. “Consumer psychology is better than anyone would have predicted two months ago.”

Economists predict between a two and three percent increase in jobs added throughout 2012. Many businesses have reported that they are ready to increase their hiring efforts in early 2012 after seeing more demand for products and a stronger consumer confidence.

Employees “not losing jobs” is a sign of slow improvement of the US economy, although potential European recession issues still trouble US economists and have the capability to slow the US employment rate. Economists expect job growth to continue during the early months of 2012, but warn that it will most likely be gradual and that there are still reasons to be concerned.